C Yields Rates Flashcards
1
Q
eqn for Net Present Value
A
NPV = from t = 0 to n SUM((net CF)/(1+r)^t)
2
Q
eqn for Internal Rate of Return
A
NPV = 0 = from t = 0 to n SUM((net CF)/(1+IRR)^t)
3
Q
what is the process of determining reinvestment funds?
A
Keep asking yourlf whether payments are in the same fund or not. Then go from there.
4
Q
what does what I have = what I demand mean?
A
what I have: are the cash inflows accumulated at the reinvestment rate
what I demand: is the accumlated outlfows at the desired yield rate
